[CAnet - news] Some European telcos encourage municipal FTTx projects

[An excellent overview and comparison of FTTx developments in Europe versus
the US.  One comment that caught my attention is that because of the
regulatory environment in Europe "some European incumbents actually
encourage municipalities to build out FTTH networks because it is less
expensive for them to lease capacity on that network rather than build out
their own...".  Ultimately I think this a solution that North American
telcos are going to have to adopt as well, if they want to  have any hope of
competing against the MSOs. The MSOs are holding all the aces with respect
to broadband in North America. And the costs for the telcos to build out
their own competitive broadband infrastructure will be astronomic.  Verizon
which is deploying its own fiber network will only reach 40% of the homes at
best. It is also an open question whether there is a business case in the
residential market for two suppliers of commodity broadband IP. Some
excerpts from Lightwave article --BSA]

http://lw.pennnet.com/Articles/Article_Display.cfm?Section=ARTCL&ARTICLE_ID=
271114&VERSION_NUM=2&p=13&dcmp=FTTXNews

European municipalities lead FTTH charge

According to a recent KMI Research (www.kmiresearch.com) report, FTTH
deployments will compose 65% of Europe’s fiber-optic market in 2010, with
fiber-to-the-node, -building, or -basement (FTTN/B) composing the remaining
35%. However, unlike in the U.S. where the incumbent Verizon is leading the
FTTH charge, the technology is experiencing greater traction among the
European municipalities and municipal utilities, particularly in the Nordic
and Benelux regions.

In Scandinavia, in particular, “there is broad government support, and the
local utility companies and municipalities are very supportive of the desire
to locally stimulate economic development,”.

One of the earliest FTTH implementations was Stokab (www.stokab.se), founded
in 1994 by the City of Stockholm to promote economic growth and stimulate IT
development in the region. The 1.2 million fiber-km network links all the
municipalities in the county and greater Mälar region. According to Stokab’s
annual report, approximately 8,000 households were connected via fiber by
the end of 2005.

Stokab has served as a model for other municipalities in the Scandinavian
region, many of which-like Stokab-are open access networks. An open access
network is operator-neutral, supporting multiple service and content
providers.

The preponderance of open access networks has influenced technology choice
among the European municipalities, many of which have opted for a
point-to-point active Ethernet architecture. According to Robert Whitman,
manager of global broadband market development at Corning (www.corning.com),
a point-to-point architecture more easily facilitates the sharing of a
network; each customer has a dedicated laser in the central office or some
point in the field. While it is technically feasible to support an open
access network via PON, the point-to-point architecture is far less complex,
he says.

Incumbents lagging behind

The municipal FTTH market in Europe has taken off faster than the PTT market
in part because there is little incentive for the incumbents to embark on
such projects. European PTTs are not facing the same competitive pressure
that the cable MSOs are putting on incumbent carriers in the U.S. “Where you
see strong competitive activity, that’s where you see major,
facilities-based build-outs of telecom networks,” says Whitman.


Finally, the regulatory environment in Europe is not favorable to the
incumbents. They must share their infrastructure, making a return on
investment more challenging. As a result, some European incumbents actually
encourage municipalities to build out FTTH networks because it is less
expensive for them to lease capacity on that network rather than build out
their own, reports Whitman. “European incumbent carriers are willing to ride
other people’s networks to get to customers,” he says, “which is a very
different mindset from the United States. Here, our cable companies and
telcos are just not going to do that.”



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